The Fashion Retailer

Extending the review of luxury organizations, niche players from the long tail in fashion and sustainable brands, it´s time to talk about leading “fast-fashion” retailers.

Mass-market fashion retailers are localized at the bottom of the Maslow´s pyramid of needs. Those brands´ business models are based on high traffic, high volume and low margin. But some organizations also have different value proposition in their portfolio of brands (e.g. Massimo Dutti within Inditex). Leading mass-market fashion businesses offer collections more frequently than the average market. This freshness describes the fast-fashion business model, where Zara, which is capable of translating trends in products in a matter of weeks, revolutionized design, manufacturing and retailing.

These companies put the customer at the center of their organizations and operations are build to reflect it. The results are more collections, a wider range of options with a reduced shelf life, higher stock turns that lower promotions needs and therefore ensure better margins and cash flows. But even if mass-market retailers share some characteristics, their approach to fashion, manufacturing, innovation, marketing and retail is quite different. For example, H&M outsources its production, releases limited edition or capsules with famous designer and invests heavily in advertising. Fast Retailing is not focus on fashion but technical garments innovation thanks to Takumis, industry experts that offer technical support to their partner factories.

These are the Global Leading Fashion Retailers analyzed some months ago in The State of Global Fashion Retailers.

INDITEX: Inditex is one of the world’s largest fashion retailers, with eight brands (Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe and Lefties) selling in 202 markets through its online platform or its over 7,000 stores in 96 markets. It was founded in Galicia (Spain) in 1985 by Amacio Ortega and Rosalia Mera. Pablo Isla, awarded as best-performing CEO in the world by Harvard Business Review (2018) is the CEO of Inditex since 2005. In 2017, the group achieved net sales of €25,3 billion and EBITDA of €5,3 billion (10% margin). See Inditex Annual Report here.

H&M: The first Hennes store opened in the Swedish city Västerås in 1947. Today, Hennes & Mauritz AB (H&M Group) is one of the leading fashion retail groups with  the following brands: H&M, COS, Monki, Weekday, & Other Stories, Cheap Monday, H&M Home, ARKET and Afound. In 2017, achieved revenues of €20,1 billion and EBITDA margin of 10%. See its Annual Report (2017) here.

Fast Retailing: The public japanese retail holding company was founded as Ogōri Shōji Co., Ltd. in 1963 by Tadashi Yanai (current President and CEO) and is headquartered in Yamaguchi, Japan. Today, its brand portfolio include Uniqlo, Theory, Princesse Tam Tam, PLST, GU, Comptoir des Cotonniers and J Brand. In 2018, Fast Retailing achieved revenues of €16,3 billion (¥2.130.060 million) and EBITDA margin of 13%. See consolidated business results here.

GAP Inc: Doris and Don Fisher opened the first GAP store in 1969. It has grown from a single store to a global fashion business with six brands — Gap, Banana Republic, Old Navy, Athleta, Intermix, and Hill City. Gap’s clothes are available in 90 countries worldwide through over 3,100 company-operated stores, almost 400 franchise stores, and e-commerce sites. Achieved revenues of €12,9 billion and EBITDA margin of 9,3% in 2017. See its annual report here.

Another organization it is worth to mention:

L Brands: Through Victoria’s Secret, PINK and Bath & Body Works, L Brands is an American fashion retailer, founded in 1963 by Leslie H. Wexner, that sells lingerie, personal care and beauty products, apparel and accessories.  The company operates nearly 3,000 company-owned specialty stores. L Brands achieved revenues of €11,6 billion in 2018.

C&A: Founded in 1841 by Clemens and August Brenninkmeijer and with headquarters in Belgium and Germany. C&A labels are Baby Club, Palomino, Here & There, Clockhouse, Rodeo Sports, Canda, Yessica, Your Sixth Sense, Angelo Litroco and Westbury.